Paper, scissors, and a new membership model for video firm Common Craft

Seattle’s Common Craft video firm has built a business out of simple, explanatory online videos made of paper cutouts — most famously the “Twitter in Plain English” video that was featured for more than a year on the Twitter home page.

Now the small company is trying to carve out a new business model — switching to a membership approach and moving away from pay-per-download videos. We connected with Common Craft’s Lee LeFever — who’s also the voice behind the videos — to find out more about the change, the implications, the state of the business, and the lingering impact of that Twitter video.

What was your business model previously?

Lee LeFever

We’ve always had two business models. The first is custom videos. Within months of launching our first video in 2007, we were hired by Google to make “Google Docs in Plain English” which now has over 4 million views. This launched us into the custom video world and we’ve since been hired by both Fortune 500s, and startups like Dropbox. A great business, but it doesn’t scale without hiring a team and we would rather not have employees.

The second model is licensing. While making custom videos, we continued to build our own library of content and offered the videos as digital downloads with individual and site licenses. Our customers were often consultants, teachers, trainers and corporations. This model scales very well and became our priority. We say that it’s an iTunes model – put in a credit card, download a file.

In what way are you changing your business model? Why did you decide to do this, and what effect will it have?

Nearly everything we do is based on feedback from customers. Over the past two years, they started to say the same thing – “We want a way to pay once for the whole library instead of buying videos one-by-one.” It made sense, so we set out to make it happen by offering a membership to Common Craft that comes with online access to our video library. It’s like we’re moving from iTunes to Rhapsody.

We love this model because it scales well and creates a relationship between us and our customers. For example, we’re providing members a tool for suggesting and voting on future video titles. This way, our video library can become a reflection of the members’ needs over time.

How much will membership cost, and what will be the benefits?

We have tiered pricing based on number of employees and include a not-for-profit discount. Individuals can join for $199/$159(np) per year and company pricing goes from $399 to $4999 per year. Our goal is for the videos to be playable wherever they’re needed, whether it’s a classroom, intranet, blog or iPad. Each video can be downloaded, embedded on a website or viewed on mobile devices. Most of the library is available with voice-overs in 8 languages.

Will you still offer videos for individual download and/or purchase?

Not through our website. We plan to work with customers who are interested in these options, but this is not our priority.

Self-portrait of Lee Lefever and his wife and business partner Sachi

What effect did the Twitter video have on your business? What lessons have you learned from that experience?

The video “Twitter in Plain English” really put us on the map, especially because it was linked from the front page of Twitter.com for over a year. It now has over 10 million views. It wasn’t a custom video. We made it and I sent it to Biz Stone, who loved it and wanted to “link the shit out of it.” On a handshake deal, we let them use it and we retained ownership. No money changed hands, it worked out to be our biggest win and helped introduce Twitter to the world. Money can’t buy that kind of relationship.

What’s the state of your business today?

Common Craft has two employees and no plans to have an HR department. My wife and partner Sachi and I do everything related to the business from the artwork in the videos to answering emails for video requests. We are 100% self-funded and have always been very profitable. Our size is a reflection of a focus on creating a business that makes and keeps us happy.

We’ve also seen consistent demand (multiple per day) for custom work – so much demand that we created the Explainer Network of producers who pay a fee for referrals from our website.

We have over 35 videos in our library and have created over 40 custom projects for companies like LEGO, Intel, Ford, Dropbox and LinkedIn. We’ve licensed videos in over 40 countries. Our videos have been viewed over 35 million times online.

While we don’t share specific revenue numbers, we’ve seen 6-figure growth in each of the last 3 years.

How would you describe your aesthetic, and your mission, to someone not familiar with your company or videos?

Common Craft videos use a simple whiteboard-and-paper format that makes complex subjects easy to understand in about three minutes. Our videos are used by educators in classrooms and on the Web to get viewers on the same page quickly.

Our mission is to make videos that help people feel confident and informed about subjects that matter.

Our new site will allow us to focus on two core things: 1) make videos 2) support our members. If we get it right, we believe Common Craft has a long, fruitful future in store.

Do you have a bunch of pens, paper and scissors sitting around your office, and you sit there madly cutting things up and drawing all day?

I never would have guessed that my profession would lead to me having an objective opinion about paper and scissor quality, but it has. We do spend time sitting around, cutting out hundreds of pieces of paper. There is a phase of every project called “cut n’ color” where all the artwork is created. I look forward to it every time. Thankfully, the cutting doesn’t take all day.

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Comments

Guest

I love what Common Craft does, but I don’t get this at all. Who is going to pay $200 for the ability to watch the 35 non-custom videos?

Darren

Yeah, I agree. I’ve been a huge fan of Custom Craft since the Google Wave video but I’m not sure how this subscription model will work out. Then again, I’m not privi to their pay-per-download numbers nor their customer feedback.

http://www.commoncraft.com leelefever

Just to Clarify Darren. We didn’t make the Google Wave video. That was Epipheo Studios. Our videos are not digital, they use stop motion and paper cut-outs on a whiteboard.

http://www.commoncraft.com leelefever

Think about it this way. You’re a trainer in an organization and it’s your job to teach social media. What resources do you have? How to you help employees “get it”? That’s what our library of videos is all about – giving these educators a resource for teaching others. It’s not about watching, it’s about putting the videos to work to solve a problem – and membership gives them the tools to do it wherever they want. The same is true for schools, universities, consultants, etc.

Ivanjo

Good on them. Happy to see their success and their focus on staying small

Michael Smolens

Lee and Sachi are amazing, and have put their lifestyle and values ahead of the usual growth growth growth – which I greatly admire. dotSUB was privileged to be involved with the Twitter in Plain English video, as it was made available using our technology for crowdsourced subtitling and ended up with 88 languages, and more importantly is embedded on 11,885 different websites in all these languages and is still being viewed from these embeds an average of 450 times/day, even though it has been removed from the Twitter home page in July, 2009. It is interesting to note that since it was removed, only 3% of the video views of the video are in English, there are 51% in Thai, 21% in Japanese and 14% in Chinese.

Commoncraft is able to change its licensing . revenue models because its videos are truly unique and add great value for those watching them, that is why Lee has repeat clients and a large audience for his content.